Chervon Holdings Limited Just Beat EPS By 36%: Here's What Analysts Think Will Happen Next

Chervon Holdings Limited (HKG:2285) just released its yearly report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$1.8b, some 3.3% above estimates, and statutory earnings per share (EPS) coming in at US$0.36, 36% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Chervon Holdings

Taking into account the latest results, the most recent consensus for Chervon Holdings from four analysts is for revenues of US$2.11b in 2022 which, if met, would be a substantial 20% increase on its sales over the past 12 months. Per-share earnings are expected to step up 17% to US$0.34. In the lead-up to this report, the analysts had been modelling revenues of US$2.14b and earnings per share (EPS) of US$0.34 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of HK$78.19, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Chervon Holdings at HK$90.15 per share, while the most bearish prices it at HK$65.32. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Chervon Holdings' revenue growth is expected to slow, with the forecast 20% annualised growth rate until the end of 2022 being well below the historical 29% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% per year. Even after the forecast slowdown in growth, it seems obvious that Chervon Holdings is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Chervon Holdings going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - Chervon Holdings has 2 warning signs we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.